The dollar hit a one-month high against major currencies on Friday, and was more than four cents away from record lows against the euro set earlier in the week, boosted by improved sentiment on the U.S. economy.

The number of U.S. workers filing initial claims for unemployment benefits unexpectedly fell last week, data on Thursday showed, in a possible sign that the economy may not be in as much trouble as previously thought.

Fed futures are now pricing in a 30 percent chance of interest rates being held at 2.25 percent this month rather than being cut FEDWATCH. Just over a week ago, the futures pricing was evenly split between a 25 and a 50 basis point cut.

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"The futures market has taken a massive amount of easing out of the market and thinks the Fed is done cutting after next week and that's driving momentum for the dollar," said Derek Halpenny, currency strategist at BTM UFJ.

The dollar index, which tracks the greenback's performance against a basket of major currencies, rose to a one-month high of 73.021 .DXY.

By 0753 GMT the euro fell as low as $1.5586, its lowest since April 3 <EUR=>, down around 0.5 percent on the day and on track for its biggest monthly decline in nearly a year.

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